What is IPAB and What Impact Will it Have on Neurology?

July 21, 2011

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In an effort to reduce the growth of Medicare spending, the Patient Protection and Affordable Care Act mandated creating the Independent Payment Advisory Board (IPAB), an outside entity charged with developing cost saving proposals that would also preserve the quality and access to care for Medicare beneficiaries.

Starting in 2013, the Centers for Medicare & Medicaid Services (CMS) will project whether or not Medicare's per-capita spending growth rate in the following two years will exceed a targeted rate. If projected Medicare spending exceeds the targets, IPAB will propose recommendations by January 15 the following year on how to reduce the rate to Congress and the president. Should Congress take no action by August 15 of that year, IPAB's proposals will become law and will be automatically implemented by the Department of Health and Human Services. IPAB's first proposal with Board's recommendations would be submitted on January 15, 2014. Learn more.

IPAB's Board Members

The board will be comprised of 15 experts, each nominated for six-year terms by the president and confirmed by the Senate; and three nonvoting members: the HHS Secretary, the Administrator of the Center for Medicare and Medicaid Services, and the Administrator of the Health Resources and Services Administration. Board members should be nationally recognized for their expertise in actuarial science, health finance, health facility management, health plans and delivery systems, and provide broad geographic representation.

IPAB's Proposals

The IPAB's proposal cannot recommend rationing health care, raising cost-sharing (including Part A and B premiums), or restricting benefits or eligibility criteria for program's beneficiaries in any other way. It should limit Medicare spending by identifying sources of excess cost growth while protecting and improving Medicare beneficiaries' access to services. In addition, hospitals and hospice will not be subject to cost reductions proposed by the Board from 2015 through 2019. Clinical labs also would be exempt for one year.

IPAB's Advisory Reports

Besides submitting cost saving proposals, IPAB also may develop and submit to Congress advisory reports related to Medicare spending. These reports can be submitted each year, beginning January 15, 2014, but they are not to be automatically implemented. For years prior to 2020, advisory reports may include recommendations on how to change payment systems for providers and suppliers in the private sector who are not subject to the Board's proposals.

Implications for Neurology

While the goal of the IPAB is to reduce Medicare spending and maintain quality of care and access for Medicare beneficiaries, its cost-saving recommendations are limited. Essentially, the Board is prohibited from raising beneficiary premiums or restricting benefits. It is not prohibited, however, from cutting payments to health care providers and suppliers, which will most likely translate into reducing payments to physicians. Hospitals and hospice are exempted from IPAB's recommendations for the first four years and clinical labs are exempt for one year. In this respect, neurologists and other physicians providing services to Medicare patients might be subject to the first payment cuts.

Currently, physicians would already face payment cuts if the sustainable growth rate formula (SGR), otherwise known as the Medicare reimbursement rate, were to be implemented. The nearly 30 percent SGR cut has been delayed until January 1, 2012, to a large extent, thanks to advocating efforts of the physician and patients' community. Under IPAB such efforts will be limited.

Inevitably, Medicare patients' quality of service and access to care will suffer if a large number of neurologists leave the Medicare program due to difficulties remaining profitable. Neurology already is facing difficulties as a cognitive specialty left out of the 'evaluation and management' incentive offered to primary care providers. Lower reimbursement rates under this plan most likely would exacerbate these problems.

If the Board establishes a successful method to control spending for health care providers and suppliers, the private sector may adopt some of the same methods or pressure physicians to offer them similar conditions.

Most importantly, as an independent entity, the IPAB was granted the authority to create proposals that become laws without congressional action. The Board only would be accountable to the president who appoints its members and so oversight of its work will be highly limited.

Academy Support for Repealing IPAB

The AAN supports the bi-partisan efforts in Congress to eliminate the IPAB and has signed on to a letter with hundreds of other physician organizations asking for its repeal. The IPAB effectively removes Medicare spending decisions from Congress and leaves them up to an unelected, unaccountable board. Decisions made by the Board likely will have a negative impact on patient access to care by adding to the number of physicians who have already stopped accepting new Medicare patients.

Members are encouraged to contact their elected officials in Washington asking them to support the IPAB's repeal.

For more information, contact Mike Amery at mamery@aan.com.